Qatar Eyes Treasury's Citi Stock

Henny Sender and Francesco Guerrera, Financial Times

Wednesday, 26 May 2010 | 5:23 AM ETFinancial Times

SHARES

The Qatar Investment Authority, a sovereign wealth fund, has expressed interest in buying part of the U.S. Treasury's stake in Citigroup, potentially boosting efforts to sell the shares amid the global rout in banking stocks, people familiar with the matter said.

The QIA's interest in Citi , which was bailed out by the government after losing $50 billion in the financial crisis, comes as other cash-rich state funds are shying away from banks — often because of big losses on such investments in the past.

The QIA, which has done well on investments in Credit Suisse and Barclays during the crisis, is open to buying some of the Treasury's 27 percent stake in Citi, the people familiar with the matter said. They warned that any deal would depend on price, market conditions and the government's willingness to sell Citi shares to a sovereign wealth fund at a discount.

The Treasury said in April it would sell the 7.7 billion Citi shares it received in return for bail-outs of the bank. Officials said 1.5 billion shares would be sold in the market by Morgan Stanley , but have not specified how the rest would be off-loaded, raising the prospect that they could place a large block at a discount with a big investor.

A person familiar with the matter said the sale of the first tranche should be completed in the coming days, paving the way for a decision on the rest of the holding.

People involved in the process said the QIA had been approached about buying Citi shares, but would not say by whom, highlighting the political sensitivities in such a deal.

Citi and Morgan Stanley declined to comment, but people close to the banks said they had not formally approached the QIA. The QIA, which manages an estimated $65 billion-$90 billion, declined to comment.

Citi's shares have fallen from $4.97 on April 20 to $3.78 at close of trading yesterday as the government's holdings have been dribbled out into the market. The Treasury received its Citi shares at $3.25.